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Why HBO Can Afford to Gamble on Girls


Ratings are only one aspect of Girls that HBO is betting on.

The new HBO (TWX) series Girls, airing for the first time this Sunday at 10:30 p.m., has been toted as the next generation's Sex and the City: four cool New York women friends have a lot of sex and laughs. The only difference is, of course, that while Carrie Bradshaw et al. lived in relative economic bliss, these twenty-somethings suffer from recession blues. Behind the scenes of Girls are some big names from the small movie world (creator Lena Dunham of Tiny Furniture and Judd Apatow of The Forty-Year-Old Virgin) and a budget that would make 2 Broke Girls weep. So why is it that no one is expecting the show to receive phenomenal ratings, and why doesn't HBO care?

When Lee Aronson told audiences at the Toronto Screenwriting Conference that television was "approaching peak vagina" time, his wording was lamentable, but he spoke to a truth about the way American television targets different genders. Network sitcoms like Aronson's Two and a Half Men play towards gender norms because they have to. If Aronson can't promise his sponsors that at least five million men will tune in, he'll lose the show's biggest sources of income. Aronson doesn't need some men; he needs Men -- the whole category.

Not so for HBO. It doesn't take a genius to figure out that the executives who green-lighted Girls didn't do so for its broad appeal. Brooklynite broke twenty-somethings who also happen to be white and privileged hardly speak to the universal experience. But critics agree that while Dunham speaks to a very small subset of the population, she does so with creativity and truthfulness. Chances are the young women Dunham spoke to in her $25,000 budget movie will tune in to Girls, and HBO is ready to take them for everything they're worth.
Cast of Girls on HBO
Last week Slate published an excellent article that details how HBO makes money: their business model doesn't rely on ratings, but subscriptions. Their leading competitor, Showtime (CBS), has grown from 13.8 million subscribers in 2005 to 20.6 million in 2011, while HBO remains steady at 28 million (the New York Times reports that HBO can expect to bank $16 a month for each of those subscribers). This means that the quirkiness of Girls works in HBO's favor; that very quality makes Girls more likely to draw in new subscribers with a fresh $16 bucks a month.

If only three million viewers tune into Girls on Sunday night, don't expect HBO to pull the plug, because subscription money is only the initial source of income. HBO owns all syndication rights to its shows and the company has spent years building up the brand. HBO knows how to sell its stuff. Game of Thrones may only average four million viewers per episode (the same amount earned Prime Suspect a cancellation), but it topped home video sales in March, according to Nielsen VideoScan, and international sales earned HBO over $25 million, or half the show's budget.

In the end, Girls doesn't need a lot of viewers; it just needs the right ones. If the few people who watch the show have good things to say (and bringing home a few Emmys wouldn't hurt), then Girls will have fulfilled its purpose. And considering the fact that the buzz on the show has already gotten pretty loud, chances are that Girls is going to be a very sound investment. Not a bad gamble.

No positions in stocks mentioned.
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